Posted Date : 31 Mar 2011
Malaysian Rating Corporation Berhad (MARC) today announced a 21% growth in pre-tax profit to RM8.0 million for the financial year 2010 from RM6.6 million the year before on the back of a 7.3% increase in revenue to RM18.37 million for the financial year ended 31 December 2010 at its 15th Annual General Meeting held at Sime Darby Convention Centre, Kuala Lumpur today. MARC’s Chairman, En Mohammad Abdullah, said in his welcoming note that MARC’s commendable performance had been achieved amid subdued activity in the debt capital market in the first half of 2010.
MARC completed 31 new issue credit ratings with a total rated value of RM35.76 billion throughout 2010 with a breakdown of RM13.32 billion in Corporate Debt (14 issues, 12 issuers), RM11.84 billion in Structured Finance (10 issues, 4 issuers), RM7.6 billion in Project Finance (6 issues, 4 issuers) and RM3.0 billion in Sovereign Debt (1 issue, 1 issuer). Out of the 31 issues, 14 issues with a total rated value of RM14.98 billion bonds and sukuk were offered to the investor market during the year under review.
Among the noteworthy issues rated by MARC was TTM Sukuk Berhad’s RM600 million Sukuk Murabahah which garnered numerous accolades in 2010 such as being named “Cross Border Deal of the Year” by Islamic Finance News and “Asia Pacific Oil & Gas Deal of the Year” by Project Finance Magazine. During the year MARC also rated Cagamas Berhad’s RM4 billion Islamic Medium Term Notes Programme and its RM1 billion Islamic Commercial Paper Programme, KNM Group Berhad’s RM1.1 billion Islamic Medium Term Notes Programme, and Boustead Holdings Berhad’s RM1 billion Bank Guaranteed Medium Term Notes Programme.
MARC saw an improvement in its downgrade-to-upgrade ratio which dropped to 2.3:1 for the year under review from 2.7:1 in 2009. MARC’s rating universe also saw a decrease in the number of issuer defaults in 2010, three against last year’s six. This signals improving corporate credit quality with the Malaysian economy’s return to growth.
Looking ahead, MARC anticipates that the trend of lower corporate default rates and declining corporate downgrade-to-upgrade ratios trends witnessed in 2010 will be maintained in 2011 on the assumption that economic conditions will remain supportive of consumer and business confidence. MARC expects corporate bond issuances in 2011 to reach or exceed the RM50 billion mark. This outlook on the domestic bond market is supported by the expectations for sustained economic growth throughout 2011, and the government’s announcement of projects totaling RM14.5 billion in value to be implemented this year under Public-Private Partnerships (PPP).
Last year, MARC also introduced two new rating services; Islamic Financial Institution (IFI) Governance Ratings and Sovereign Issuer Ratings. MARC’s Chief Executive Officer, Mohd Razlan Mohamed said, “the introduction of these two new rating products signals MARC’s continuing commitment to serve the financial markets with reliable and independent assessments on risk”. The credit rating agency continues its role as technical partner to Dhaka-based rating agency, Emerging Credit Rating Ltd’s (ECRL), under a Technical Collaboration Agreement signed in 2009. Currently, MARC is also in the final stages of concluding an agreement with Islamic International Rating Agency (IIRA) to provide technical assistance to the Bahrain-based rating agency.
Commenting on the Guidelines on Registration of Credit Rating Agencies by the Securities Commission which was issued on 30 March 2011, Razlan said, “MARC has always been mindful of the need for good governance and transparency in the credit rating business, and I am confident that the new regulatory regime will address issues which are important to our domestic debt capital market – trust, accountability and public perception.”
Going forward, MARC will remain committed to rating agency best practices and capacity building, keeping to its new vision of being a provider of trusted insights on risk.